Farmers & Merchants Nat. Bank v. Ostlie
| Decision Date | 14 July 1983 |
| Docket Number | No. 10406,10406 |
| Citation | 336 N.W.2d 348 |
| Court | North Dakota Supreme Court |
| Parties | FARMERS & MERCHANTS NATIONAL BANK, Plaintiff and Appellee, v. Althea OSTLIE, Defendant and Appellant. Civ. |
Vaaler, Gillig, Warcup, Woutat, Zimney & Foster, Grand Forks, for plaintiff and appellee; argued by John S. Foster, Grand Forks.
Murray, Olson, Larivee, Bohlman & Engen, Grand Forks, for defendant and appellant; argued by Bruce E. Bohlman, Grand Forks.
This is an appeal from a summary judgment entered by the District Court of Grand Forks County, on February 10, 1983, awarding to the plaintiff, Farmers and Merchants National Bank (Farmers), recovery on a promissory note signed by the defendant, Althea Ostlie. On appeal, Althea contends that the summary judgment was improper in this case because there are material factual issues in dispute which entitle her to a trial on the merits. We reverse the summary judgment and remand for further proceedings.
It is undisputed that Althea signed a promissory note in favor of Farmers under which Althea is the apparent maker and principal. Althea asserts, however, that the parties understood she was only signing the note as a surety for her son, Neil Ostlie, and that Neil was to be primarily liable for repayment of the note with Althea being responsible for payment only in the event that Farmers could not collect from Neil. Althea asserts that the purpose of this understanding or agreement was to allow Neil, who had already borrowed the maximum "legal limit" from Farmers, to borrow additional money from the bank. Althea asserts that under Section 22-03-02, N.D.C.C., the district court should have allowed her to introduce evidence to show that she was a surety only and not a principal on the promissory note:
The foregoing provision is derived from a California statute 1 which has been interpreted by the California courts as allowing extrinsic or parol evidence to prove that one who appears to be a principal under a written instrument is, in fact, a surety. Wexler v. McLucas, 48 Cal.App.3d Supp. 9, 121 Cal.Rptr. 453 (Cal.App. Dep't Super.Ct.1975); Beverly Hills National Bank v. Glynn, 267 Cal.App.2d 859, 73 Cal.Rptr. 808 (Cal.App.1968).
As a general rule, parol evidence is not admissible to contradict the terms of a promissory note or other writing. See, Evenson v. Hlebechuk, 305 N.W.2d 13 (N.D.1981). However, we construe Section 22-03-02, N.D.C.C., as the California courts have construed their similar statute, to provide a specific exception to the parol evidence rule by allowing extrinsic or parol evidence to show that although one appears to be a principal under a written instrument he is, in fact, only a surety. See, People's State Bank v. Francis, 8 N.D. 369, 79 N.W. 853 (1899). Thus, we agree with Althea that the district court should have allowed...
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